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The Federal Reserve’s favored inflation index came in hotter than expected in March, showing that price increases have ticked up slightly from earlier this year.

Powell, Congress and other things to yell about

Federal Reserve Chair Jay Powell will appear before Congress starting today. It’s never an easy gig, but at least the U.S. economy is doing well.

Powell starts off in the House this morning and will journey to the Senate tomorrow. These are standard, statutorily mandated appearances where the Fed chair will talk about monetary policy and a lot of other stuff. (Hopefully, he talks about his love for the Grateful Dead).

Economy 101: Things are looking pretty good for both the Fed and White House when it comes to slowing inflation while boosting economic growth. The U.S. central bank’s preferred inflation gauge is hovering around 2.8% annually, according to the latest numbers. And we expect President Joe Biden to lean hard into the economy in the State of the Union address tomorrow — ultra-low unemployment and rising wages will help.

There will be some chatter revolving around when the Fed might cut rates. Progressives want those cuts to come sooner than later, but most other lawmakers have taken a hands-off approach in recent weeks. “This is more art than science,” Sen. John Kennedy (R-La.) said. “In some respects, our economy is overheated. In some respects, it’s underheated.”

Many Democrats have worries about the impact higher interest rates have had on the affordability of housing. Powell has said housing affordability isn’t part of how the Fed balances the risks of inflation, but that won’t stop lawmakers from asking. “We have seen a slowdown when it comes to the housing market,” said Rep. Nydia Velázquez (D-N.Y.).

Broader banking policy will get plenty of billing. We’ve spilled a lot of ink about Basel III, a set of capital reforms proposed by the Fed that banks are fighting. Powell isn’t the front person on that reform — that distinction belongs to Vice Chair for Supervision Michael Barr — but expect lawmakers to batter the chair with questions about how the reforms could change before they’re finalized.

We’ll also probably hear about some less marquee issues.

Some news here: An interesting bipartisan group of House lawmakers wrote to the Fed this week with concerns about proposed changes to Regulation II, a Dodd-Frank era reform that caps what fees banks can charge in debit card transactions. Read the letter here.

Members led by Reps. Nikema Williams (D-Ga.) and Blaine Luetkemeyer (R-Mo.) are concerned the latest update from the Fed in this space could undermine banks’ ability to offer certified low- or no-fee checking accounts.

“We are concerned that the proposed nearly 30% cut in debit interchange rates could upend the economics that enable financial institutions of all sizes to offer Bank On-certified accounts in a sustainable manner, thereby limiting consumers’ ability to access affordable banking products,” the lawmakers wrote.

— Brendan Pedersen

Presented by The Coalition to Project American Jobs

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Editorial photos provided by Getty Images. Political ads courtesy of AdImpact.